Our View: Banking on the US Postal Service

Saturday

Feb 22, 2014 at 6:00 PM

Congress replaced the old Post Office Department with the U.S. Postal Service with the intention that the USPS would be self-sustaining and unsubsidized. It was time, Congress said, for the Postal Service to be run like a business, at least until it wanted to do something like close post offices, which Congress would have to approve in advance.

Congress replaced the old Post Office Department with the U.S. Postal Service with the intention that the USPS would be self-sustaining and unsubsidized. It was time, Congress said, for the Postal Service to be run like a business, at least until it wanted to do something like close post offices, which Congress would have to approve in advance.

As changing technology ate into the Postal Service’s revenues, it has too often responded like an unimaginative business by constantly raising the price on declining volumes of first-class mail and by reducing services, as in its wish to eliminate Saturday delivery.

But smart and innovative businesses look for ways to do more, not less, with available resources. The Postal Service, for instance, has well-staffed offices in every small town and city neighborhood in the country. It has credibility, oversight, efficiencies of scale and, as a longtime seller of money orders, a foot in the financial services door.

In a recent report, the Postal Services Inspector General proposes using those advantages to bring new business into post office doors. America’s poorest neighborhoods are underserved by commercial banks, the report says, with one out of four households living without bank accounts and forced to use non-bank services like check-cashing operations, pawn shops and payday lenders. Those services are costly, the IG reports, with a typical household paying $2,412 a year in interest and fees to alternative banking services – about 10 percent of its annual income.

By offering a range of banking services – including prepaid debit cards, e-commerce services, bill payments, international money transfers and small loans, Postal Service offices could save money for its customers and make money for itself. The report projects the new services could bring as much as $8.9 billion in annual revenue.

Since Congress held onto its prerogatives when it created the Postal Service, it would take legislation in order for the USPS to begin experimenting with offering banking services in locations where they are most needed. Backers of the initiative can expect resistance to the government offering better deals on necessary services now provided by the private sector. Payday lenders are the low-rent tail that has, in the past, wagged the financial services dog, lobbying fiercely against the creation of a Consumer Finance Protection Bureau, for instance.

One who won’t be thrown off by the opposition is the mother of the CFPB, Sen. Elizabeth Warren, D-Mass. Warren is well aware of the toll predatory lenders have taken on many American families, and she has already endorsed the inspector general’s proposal. “We need innovative ways to create pathways for struggling families to build economic security,” she has written, “and this is an idea that falls in that category.”

If it truly wants the Postal Service to be a successful business, one that responds to the needs of the market, Congress should free the USPS to add banking to its services.